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Analysts disagree on chip forecasts in 2016

Posted: 13 Jan 2016 ?? ?Print Version ?Bookmark and Share

Keywords:FinFET? IoT? GDP? DRAM? iPhones?

Analysts have varied forecasts of semiconductor revenues for this year and of factors that will likely drive them in the longer term. They all agree, however, that China will be a key factor but one that is almost impossible to predict.

Bill McClean of IC Insights is currently the bull, predicting 4 per cent revenue growth in 2016. Handel Jones of International Business Strategies (IBS) is the bear, forecasting a 1.5-per cent decline that could slide to -3 per cent when he updates his crystal ball at the end of the month. In the middle, Gartner expects 1.9-per cent growth.

Rising GDP, upbeat guidance from Intel and TSMC and plans to tighten capacity growth among DRAM vendors makes McClean optimistic. He predicts electronic system sales will be up 2 per cent and chip capital equipment will be up 1 per cent this year. Long term, chip revenues could average 6 to 7 per cent, he said.


IBS may revise chip sales predictions down from a -1.5 per cent to a 3-per cent contraction. (Source: IBS)

Jones thinks memory chip prices and smartphone sales could continue their slides. Apple, for example, might sell just 48 million iPhones in the year, not 52 million currently forecasted, he said.

Meanwhile fabs are having trouble yielding high-end 14/16nm chips, Jones said. Only Apple and Samsung are shipping chips made in the FinFET processes, leaving foundries with 50,000 wafers/month in unused leading-edge capacity, he estimated. Nevertheless, he projects chip revenues could go on a single-digit rise starting in 2017.

Gartner sees a similar steady rise, but starting this year and averaging 2.7 per cent from 2014-2019. The bad news is smartphone sales will continue to slow until 2019 when it becomes a saturated replacement market much like today's PC sector, said Bob Johnson, research vice president of semiconductor manufacturing at Gartner.

NAND flash is "a rare bright spot" with an 8.7-per cent compound growth rate through 2019 and an increasing amount of sales in vertical NAND chips sold in solid-state drives, Johnson said.

Growth is even faster in chips for the Internet of Things. But IoT will make up less than $30 billion in semiconductor sales by 2019, about 7.2 per cent of the chip market, given average selling prices of a couple dollars per chip.

That said, IoT could shift the semiconductor sector away from its current dependence on "notoriously cheap consumers," Johnson said. He predicted businesses will need to invest in everything from gateways to analytics to squeeze the real value out of IoT.

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